I NEED JUST THE QUESTION P2-5!!!!

CHAPTER 2 The Financial Market Environment 53 6P2-2 A verage corporate tax rates Using the corporate tax rate schedule given in Table 2.1, perform the following: Calculate the tax liability, after-tax earnings, and average tax rates for the fol- a. lowing levels of corporate earnings before taxes: $10,000; $80,000; $300,000: $500,000; $1.5 million; $10 million; and $20 million. b. Plot the average tax rates (measured on the y axis) against the pretax income lev els (measured on the a axis). What generalization can be made concerning the re- lationship between these variables? 6 P2-3 Marginal corporate tax rates Using the corporate tax rate schedule given in Table 2.1, perform the following: a. Find the marginal tax rate for the following levels of corporate earnings before taxes: $15,000; $60,000; $90,000; $200,000; $400,000; $1 million; and $20 million b. Plot the marginal tax rates (measured on the y axis) against the pretax income levels (measured on the x axis). Explain the relationship between these variables. P2-4 Interest versus dividend income During the year just ended, Shering Distributors, Inc., had pretax earnings from operations of $490,000. In addition, during the year it received $20,000 in income from interest on bonds it held in Zig Manufacturing and received $20,000 in income from dividends on its 5% common stock holding in Tank Industries, Inc. Shering is in the 40% tax bracket and is eligible for a 70% di- idend exclusion on its Tank Industries stock. a. Calculate the firm's tax on its operating earnings only b. Find the tax and the after-tax amount attributable to the interest income from bonds. Find the tax and the after-tax amount attributable to the dividend income from the Tank Industries, Inc., common stock. d. Compare, contrast, and discuss the after-tax amounts resulting from the interest income and dividend income calculated in parts b and c. What is the firm's total tax liability for the year? e. 6P2-5 Interest versus dividend expense Michaels Corporation expects earnings before in- st and taxes to be $50,000 for the current period. Assuming an ordinary tax rate teres of 35%, com stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions a. The firm pays $12,000 in interest. b. The firm pays $12,000 in preferred stock dividends. pute the firm's earnings after taxes and earnings available for common s considering the sale of two nondepre- P2-6 Capi ital gains taxes Perkins Manufacturing